Thursday August 27th – ‘Buy With A Stop’

 

SPX – The General Markets continued higher, you can stay long with a stop above the 13 sma, and…

 

NASDAQ – I have discussed that it feels like ramp up into a blow off top may be happening.

 

WTIC – Yesterday was the oil inventory report and we saw Oil slowly continue higher above that 200sma. One way to trade OIL long would be by using UCO or USO,  but NOT the Oil /Energy Stocks. As discussed here…

 

XOP  – Oil / Energy Stocks did not follow Oil. It seems that they are too late in their daily cycle and are seeking out a daily cycle low.  We are at day 33 of possibly 40(ish).

 

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Important:  The Precious Metals have become bullishly lined up. The question is: Is this just a short term Bullish set up, a POP & DROP in the making? Or is this daily cycle about to break to new highs again, and extend the bull run, delaying the sell down into an ICL until the next Daily Cycle comes along?  It’s actually hard to tell, but let’s discuss these recent developments.

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GOLD – This honestly looks quite bullish, a triangle consolidation after that steep multi-week run straight up.

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GOLD – This could break out & run, extending the intermediate cycle or it could become a double top & roll over.  We just can’t tell at this point, but the MACD is not improving with this sideways rise, so I’d at least remain ‘cautious’.  That said,  Gold could   be bought with a stop  (  GLD for example).

 

SILVER  – This is actually a bit more bullish looking than Gold, because it did not even drop to the 34 sma, it has closed above the 20sma for most of this consolidation. This actually looks ready to break out now as it pushes that upper trend line. Today will let us know.   What about the Miners? I Noticed the increasing bullishness in the morning yesterday …

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I Noticed the increasing bullishness in the morning yesterday , so I posted this message in the live area before I had to leave for the day. Click on it to enlarge it if you aren’t using a touch screen that can stretch it out. Basically I was saying that this can break out & push higher, close any ‘hedge’ or ‘short’ positions at this point.  you could also go long if, as the opening Theme of this report says, you ‘Buy with a stop’.  I will discuss this at the end of the report...

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GDX MIDDAY at $41.33, and I posted :

 

GDX CLOSED AT $41.60 – There are many similarities to the bullish set up ( Double bottom low) from the June dcl. That DCL was followed by a rally higher a few days later. Please view the chart, and I will discuss this further.

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I would hate to get people heavily into the Miners trade, only to see it chop around, fall apart, and roll over.  That can be frustrating, however, the set up has turned bullish short term in many ways, so I will discuss this below. Just like any other trade set up,  if you buy with a downside protection in place ( a stop, mental or physical),  your risk reward is good here.

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Let’s discuss Miners, the good and the bad,  a bit further below. Enjoy your Thursday trading!

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~ALEX

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IAG #1:  This is the good thing with stocks similar to IAG. If you sold when I did, you sold around $5.  IAG is now double bottomed at $4.  You saved $1/share on that sell off.  If you owned 3000 shares,  you saved $3000.  5000 shares , you saved $5000. 8000 shares, you saved $8000 , etc. And now…

 

 

IAG – If you buy here & it only runs back to $5.25 again or even $6.25,  those are still great gains. Read the chart. You still need a stop in case it just chops and drops later.

DRD  The Pro’s and Cons for DRD are:  A run from a  long consolidation could add great gains. Notice that with some of these Miners, you haven’t missed any upside yet.  Even if you sold  7 weeks ago, you haven’t missed anything. DRD is now pushing on the 50sma, and would become a buy as it gets above that 50sma.

 

ELYGF  also has not run away without you. It is priced where it was in May. What I like is that the MACD has realigned itself, but this is now trading below the 50 sma after breaking above it at the recent dcl. As a box consolidation, I do think that this could be accumulated here.  (Stop under the box if you want).

 

2 ways to look at a Miner like HL

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HL #1 Pro’s & Cons.  PRO:

–  Is this a low risk entry? Yes, it reversed at the 34 sma and Silver is set up quite Bullishly too.

–  Can this just run higher, as shown with the Green line? Yes, it could.

–  Is this low risk, high reward on the 20sma? Yes, that is.

 

HL #2  CONS : The MACD is weak. This could POP & DROP just like it did at the dcl on Aug 11&12.  Also in June we saw several Pops that just chopped sideways ( See false reversals). So the bad part is that this good looking set up can still pop & Drop as drawn here.   Perhaps an a-b-c-d-e drop  or 1-2-3-4-5 to the 50sma.

HMY  – Now when I look at HMY,  this is a really good looking set up to me. It DID already do a 1-2-3-4-5 drop to the 50sma. It dropped from $7.50 to $5.50, good savings of $2/share.   Now I see a bullish wedge.  The MACD is back to the zero line. Miners that are set up like this really do look good, after selling off for 1 month.

 

NOTE ON HMY – Even a good set up like this can still go either way, and a choppy trade can be a bit frustrating too. Consolidations can last 2 months, and we saw that with HMY already.  Look at the April peak to the June lows, we could see that again.  That was frustrating, but eventually it lead to a great rally. This could do the same,  but as long as we understand the risk & reward, we can take the trade.

 

WKHS – Something that I can show you with this chart is that yesterdays reversal with the Miners can do this too.  Comparing a chart like this consolidation to the Miners current consolidation can be a good visual aide. Notice how WKHS has had 3 or 4 strong reversals, but they simply continued the consolidation rather than a solid break out.  We could see that with Miners too.

So I just wanted to explain the trade set up here with the Precious Metals, and I will sum it up this way:

I DO NOT think that the recent dip & chop was a drop into an ICL. I would say that that is still ahead.  The question is, “Is it delayed with another daily cycle that makes new highs and THEN we roll over into weaker daily cycles later?”  That could happen here at month 5 if we drop into month 7 (October).

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The trade set ups mentioned yesterday ( NIO, SOLO, WKHS, etc) are ‘Swing Trades’, which means that they can take a week or 2 to play out. NIO continued higher, but what about some of the others? I think they’re fine at this point.

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WKHS popped & dropped yesterday, but this set up has not changed. A tag of the lower trend line or 50sma is possible.A reversal there would be a good place to add with a stop.

 

ALLY FINANCIAL – This set up is bullish and it looks like it wants to break out an continue the run higher.  It can be bought here or put it on a watch list and wait for a solid break out.

 

This is a similar set up to ALLY, except this one has broken out.  I am ONLY showing this to show why I Like ALLY,  this is not a buy, it is extended. Scroll up & look at ALLY  vs  This one 2 days ago.

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URANIUM Stocks were mentioned last week as Bullish consolidations.

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This chart of NXE was mentioned a couple of days ago ( and last  Friday when Uranium Stocks were mentioned)  as bullish consolidations…

 

NXE is breaking out to new highs

UUUU was mentioned here on Aug 18 and last Friday as a bullish consolidation above the 50 & 200sma. A buy with a stop… 

UUUU – Now we are seeing that those Uranium Stocks that were mentioned in last Fridays report are Popping from their consolidations too. This can still be bought, and we also discussed URG, UEC, DNN, NXE, CCJ, URA, URNM. 

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DNN is breaking out with volume that looks to be increasing too.

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URNM (and URA)  These are Uranium ETFs. This one still has very light volume, but I wanted to show how it is at new highs.  The URA etf has volume that is better.